A surge in oil supply in 2018 is expected to outpace an anticipated pick-up in demand that will push global consumption above 100 million barrels per day (bpd) for the first time, the International Energy Agency said on Wednesday.
The Paris-based IEA said production outside the Organization of the Petroleum Exporting Countries would grow twice as quickly in 2018 as it will do this year, when OPEC and 11 partner nations have restrained output.
“For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply,” the IEA said.
“In 2018, we expect non-OPEC production to grow by 1.5 million bpd which is slightly more than the expected increase in global demand.”
Brent crude futures extended losses after the report, falling 64 cents on the day to $48.08 a barrel by 0804 GMT, from around $48.26 prior to the release.
Oil inventories across the world’s most industrial nations rose in April by 18.6 million barrels to 3.045 billion barrels, thanks to higher refinery output and imports. The IEA said stocks were 292 million barrels above the five-year average.
The agency continued to forecast an implied shortfall in supply relative to demand for the second quarter of this year.
But it said slowing demand growth in China and Europe in particular, as well as increasing supply, meant the deficit should narrow to 500,000 bpd from a prior estimate of 700,000.
OPEC and 11 rival exporters including Russia have agreed to extend a deal to limit supply by 1.8 million bpd to March 2018, in order to cut global inventory levels, Reuters reports.
Crude output from OPEC nations rose by 290,000 bpd in May to a 2017 high of 32.08 million bpd, still within the confines of the supply deal, after comebacks in Libya and Nigeria, which are exempt from cuts.
